Judge Blocks Removal Of KRS Chair, Allows Board Reorganization

Aug 22, 2016

Credit J. Tyler Franklin/WFPL News

UPDATE: A Frankfort judge has blocked Governor Matt Bevin’s removal of the chair of the Kentucky Retirement Systems board, but he’s allowing the governor’s reorganization of that agency’s board of directors to remain.

Judge Phillip Shepherd ruled late Monday that KRS board chair Tommy Elliott should remain in that position, granting a temporary injunction to Elliott and Attorney General Andy Beshear, who had sued Bevin.

The judge also allowed Bevin’s reorganization of the retirement systems’ board to remain in place.

Bevin abolished the Kentucky Retirement Systems board in June and created a new board with additional members. He also removed Elliott in April, three years before the end of his term.

The governor’s office issued a statement Monday evening applauding Shepherd’s decision regarding the board overhaul, while at the same time disagreeing with the order to allow Elliot to remain chair.

“We are pleased the court has recognized Gov. Matt Bevin’s authority to reorganize the KRS board under KRS 12.028,” the statement said. “The new transparency provisions and board members with substantial investment experience are critical to turning around the nation’s worst funded pension plan.”

The statement goes on to say that Bevin’s administration is “confident the court of appeals will reaffirm that Mr. Elliot is not a member of the new KRS board.”

Beshear said in a statement that the judge’s ruling meant questions over the governor’s executive actions were appropriate.

“While our request for a temporary injunction was not granted, Judge Shepherd in his ruling today recognized the important and legitimate questions my office has raised about the governor’s authority to re-organize the KRS board,” he said. “Our goal is to quickly move this case to a final decision at the trial court level and ultimately to the Supreme Court of Kentucky.” 

Original Story:

A judge says he will rule Tuesday on whether to temporarily block Gov. Matt Bevin’s reorganization of the board that oversees the pension system for most state workers.

Bevin abolished the Kentucky Retirement Systems board in June and created a new board with additional members. He also removed board chair Tommy Elliott in April, three years before the end of his term.

Elliott and Attorney General Andy Beshear have sued Bevin over the moves.

KRS attorney Brian Thomas said that the board needs clarity on whether the new board is legal before making important investment and personnel decisions in the coming weeks.

“At least from the agency’s standpoint, it is unclear to the agency on how to proceed,” Thomas said.

On Tuesday, the board’s investment committee is scheduled to meet and make “four or five” investment decisions that executive director Bill Thielen said amounted to $40 to $50 million per decision.

“Managers will be there to make presentations and then the committee will decide whether they’re going to invest that money with that investment manager, and then ultimately that would be ratified by the board,” Thielen said after the hearing.

 

The board will also soon select an interim executive director and form a search committee to replace Thielen, who is retiring at the end of the month.

Franklin Circuit Court Judge Philip Shephard’s forthcoming ruling comes weeks after he ruled to temporarily block Bevin’s overhaul of the University of Louisville board of trustees, which the governor also reorganized by executive order in June.

Bevin dissolved the 17-member U of L board, alleging dysfunction among the group. He later reconstituted it as a 10-member board. Beshear also challenged that move.

Steve Pitt, Bevin’s general counsel, is arguing both cases in Shepherd’s court.

“I know that the board’s got a meeting coming up and the investment committee needs to meet prior to the board meeting, so there are some reasons to get a ruling in place,” Pitt said.

Bevin has appealed Shepherd’s temporary block of the U of L overhaul to the Kentucky Court of Appeals.